Article by Phil
So, what do people want from their Independent Financial Advisor?
When it comes to their savings, research by Nextwealth found that the top priorities for investors were:
- Maintaining their savings levels so that they don’t run out of money – 71%
- Being able to pass money to their children and grandchildren – 65%
- Managing the costs of inflation – 64%
- Covering their long-term care costs – 45%
- Having enough money to travel in their retirement – 44%
These are all things that your Independent Financial Advisor can help you with. Through careful planning and advice. What the list doesn’t say is growing investment value. This is not really your adviser’s job. That is handled by the fund managers working on your chosen investment solutions. It’s often a misconception that advisers look at the best performing investments. That’s not really the case. Your Independent Financial Adviser is there to advise you on solutions that will help you to meet your financial objectives.
Research from Investec shows that 20% of savers who have equity investments can’t actually find an Independent Financial Advisor to help with advice. The main reasons were:
- Value of investments being too low – 41%
- Didn’t think the Independent Financial Advisor was any good – 39%
- Though their adviser was too busy to deal with them – 24%
Hopefully none of these would apply to us.
In a new development the Financial Conduct Authority (FCA) says that it will start to name and shame financial services firms who come under investigation. The new strategy is intended to make firms think twice before breaking conduct rules. The FCA wants to be seen to be tough on those who break the rules. The idea is that it will give customers more confidence and encourage whistleblowers to be more proactive. On the flip side, the action could do serious damage to firms who are subsequently found to have done nothing wrong. Especially since nearly 70% of all FCA investigations end up being closed without any action being taken. So, I’d expect the FCA to be sure about their allegations or likely face legal action and claims for damages.
The FCA is also taking proactive steps to encourage savers to look for better savings rates. In a new £500,000 multimedia campaign they are promoting a switch savings message. This is in response to the fact that only 50% of customers had switched or even considered switching their savings account provider. 37% haven’t switched for the last five years or more. 25% have never switched. The increase in savings rates over the last 12 months has meant that more competitive rates have started to creep back into the market. The FCA has previously written to all the Banks to instruct them to offer their clients the best savings rates available to them, rather than running a multitude of different accounts at different rates.
In other news, there seem to be a lot of claims for compensation swirling around the financial advice market at the market.
Not least against market leader St James Place (SJP). They have been subject to a high-profile marketing campaign by Claims Management Company (CMC) AMK Legal according to reports from Citywire. They claim that SJP have hired almost 100 new complaints handlers to deal with the rising number of complaints and that they’ve had to pay over £3 million in compensation. This could be the tip of the iceberg with reports coming through that SJP have provisioned over £400 million to deal with expected claims.
That’s all well and good but if customers use CMC’s the help them, the CMC’s take over 50% of any compensation for their own fees. Imagine if a financial services firm tried to charge a customer 50% of their investment in fees, there would be an outcry. I’m not sure CMCs are doing the financial services market or its customers and favours. Advice fees are high enough without having to deal with CMC’s touting for claims.
Financial services firms already have a lot to contend with. Including a rise in financial crime and scams. The latest figures indicate that almost half of professional firms, solicitors, advisers and brokers have experienced attempted scams. With state agents reporting a jump in attempted crimes from 17% to 37% last year. Although financial advisers did report a small fall in numbers year on year.
